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Aberdeen Asset Management, the UK-based investment house which has traditionally stuck to a long-only strategy, is considering a push into alternative assets led by a star executive who is credited with the company's successful integration with parts of Deutsche Asset Management.

The manager, invests the vast majority of its assets under management in equities, fixed income or property, and very little in alternatives such as private equity, according to a spokesman.

However, Aberdeen's head of fixed income, who is credited with the successful integration of parts of DeAM's UK business, is set to leave his job next year and Aberdeen is now in discussions with him about establishing an alternatives asset management business then.

A source close to the situation said that the new business would be likely to focus on absolute return strategies such as hedge funds, rather than other alternative asset classes such as private equity.

The star executive, Steve Illott, is credited with increasing Aberdeen's fixed income assets under management from $71bn (€48.3bn) to over $100bn since the acquisition.

Ilott will hand over responsibility for Aberdeen's fixed income business to the head of the firm's US business Gary Bartlett on January 1 2008. Ilott's contract with Aberdeen ends in March.

Bartlett is chief executive of Aberdeen’s US arm and head of the group’s Philadelphia fixed-income business. He will keep his role as head of the US business and remain in Philadelphia. He will report to chief executive Martin Gilbert.

The details, such as the ownership structure of the new venture, are still under discussion, according to Aberdeen.

Related

According to its annual results to the end of September released at the beginning of the month, Aberdeen broke the barrier of £100bn (€139.6bn) in assets under management for the first time this year thanks to new mandates and acquisitions. Over the 12 months to the end of September, it had gained £8.7bn of net new business and had been awarded a further £3.1bn of mandates, and profit before tax over the year increased by 30% to £94.3m.

The firm's fixed income teams resisted investing in collateralised debt obligations over the year, meaning the firm avoided the worst of the credit crunch. Over the financial year to the end of September, the fixed income division received £5.1bn of net new business, along with a further £1.4bn awarded but still to be funded at the year end.